Lump Sum vs Time and Materials for Underwater Work

By Priya Raghunathan, Port authority procurement analyst. Reviewed by Amanda McCallister, editor.

Marine Construction | Boat Lift Installation Last spring I sat at my desk with a bid tabulation that looked too good. One contractor offered a lump-sum price for our North Jetty inspection that was 38 percent under everyone else. I called the dive superintendent, and he laughed. 'That's because we didn't add mobilization.' That moment taught me more about procurement than any RFP template. I've been writing and scoring underwater services RFPs for the port for nine years. We hire divers to inspect concrete, steel piles, cathodic protection, and the occasional lost mooring. And I've learned that the contract type matters as much as the dive team's certs. Here's the honest breakdown, from my side of the desk: lump sum vs. Time and materials, and how to decide without getting burned.

The Short Version: Two Ways to Pay

Lump sum is a fixed price for a defined scope of work. Time and materials is a daily rate for the people and gear, plus invoices for actual hours. For underwater work, the real difference is about who owns the uncertainty. You're paying for the contractor's risk assessment either way—lump sum you just don't see the markup. Let me give you a concrete example. Last year we had to inspect 1,200 linear feet of steel sheet pile at Container Terminal 4. The site was known, the drawings were clean, and we had survey data from two years ago. Three bids came in lump sum: $28,000, $32,000, and $34,500. The low guy was the one who laughed about mobilization. When we added his mob cost from the fee schedule, the real number was $38,100. So the spread was real—but the lowest wasn't the lowest.

When Lump Sum Works (and When It Bites)

Lump sum works when the scope is clear and the conditions are known. If I can hand a contractor a bathy survey and a video log of the structure, they can estimate the bottom time. That's when a fixed price gives you budget certainty. For a simple anode replacement on a pier, call it $12,000 for a four-diver team, a barge, and a supervisor. No one gets rich, and no one gets hurt on the money. But lump sum bites when you're asking divers to search for something unknown. Say you're chasing a fallen barge from the last storm. The debris field could be 100 feet long or 1,000. A contractor who quotes lump sum on that is either guessing or padding the price. And the second you change the scope—oh, the wreck is buried under silt—the change order will be fast and painful. I've seen change orders swipe 30 percent of a lump-sum price. The rule of thumb: if the 'known unknowns' are high, don't force lump sum. If you do, you'll pay for the worst case in the base price.

Time and Materials: The Honest Number

Time and materials is the honest number for investigation work. You agree on a day rate for the team and the equipment, then you pay for what happens. A dive team with a survey launch and an ROV will run you $9,000 to $18,000 a day, give or take. That depends on the plant—I mean the equipment—and the diving mode. Air diving on a jetty is cheap. Saturation diving offshore is a different planet. But T&M also requires you to audit the invoice. I ask for a price sheet that lists every role: dive supervisor, diver, safety diver, ROV pilot, deckhand, and the vessel. I turn down blank line items with 'miscellaneous consumables' unless they're itemized. And I cap the hours. There's a digression here: last year I procured environmental sediment sampling for a turning basin. The contractor's rates looked fine until I noticed they charged 12 hours for an 8-hour window—every day, including the lunch break. That's not a T&M problem; that's a contract administration problem. The upside of T&M is you only pay for what you use. The downside is you're exposed to slow work, weather downtime, and a crew that's in no rush. That's why I always put a 'not to exceed' clause on the total. T&M with a cap gives you the best of both worlds.

The Hidden Factors Nobody Puts in the Bid

Mobilization might be the biggest one. For a marine dive op, the boat, the dredge gear, and the dive spread have to get to your site. That's a cost no matter what. I've seen lump-sum bids that exclude mobilization, demobilization, and permit fees. Ask for 'all-in' pricing or you'll get a surprise on the final invoice. Also, bottom time is not the same as 'working time.' A six-hour dive day might have two hours of actual bottom work. The rest is setting anchors, checking gas mixtures, and waiting out a current. An ROV can extend your data collection, but a work-class ROV like a Saab Seaeye Falcon or a VideoRay Pro is an upfront cost. If a builder says they'll include ROV time, find out if that means the unit is on station or hovering over the concession stand. And don't forget the diving mode. Air diving on a short hose is fine for depths under 40 feet. For deeper work, you're looking at mixed gas, and that changes the rate. One thing that always shows up in pricing: the site's seabed conditions. Mud, silt, and zero visibility can double your survey time. The contractor with local knowledge is worth the premium.

How I Structure the Comparison

In every RFP, I ask for two things: a lump-sum price for a defined scope, and a T&M rate card for the same work. That way I can compare apples to apples. I put a weighting score in my evaluation matrix—60 percent technical, 20 percent price, 20 percent schedule. But within the price, I look at each contractor's lump-sum number and their T&M rate card side by side. If the scope is known, I lean lump sum. If the scope is fuzzy, I'll take T&M with a cap and a clearly defined work order. I also model a weather scenario: two days of stand-down because of a nor'easter. That gives me the expected total cost for each contract type. For a harbor inspection job, a $25,000 lump-sum bid becomes $31,000 if we add three days of weather delay at a $2,000-a-day standby rate. The T&M bid might be $28,000 in the baseline but $36,000 in the storm scenario. It's all about your tolerance. My scorecard doesn't pick a winner; it just forces the tradeoff into the open.

Frequently Asked Questions

What's the main difference between lump sum and time and materials in diving contracts? Lump sum is a fixed price for a defined scope. T&M is a daily rate plus actual hours and equipment. The contract type decides who carries the risk of unknown conditions. Can I switch from a T&M to a lump sum after the bid? Yes, but only if you have enough survey data and a very clear scope. Otherwise, you'll just pay a large contingency inside a fixed number. Is an ROV cost included in the day rate? Not always. Some contractors quote an ROV as a standalone line item and a pilot as a separate rate. Check the price sheet carefully. What should I watch for in a T&M invoice for underwater work? Inspect the hours for each diver and role, verify weather standby rates, and look for duplicated equipment charges. A clear rate card with a not-to-exceed clause protects both parties.